Ventura City Council Meeting
January 18, 2011
Ventura City Hall - 501 Poli Street
Solo Item : Memoranda of Understanding (MOU) with Employee Bargaining Units : Recommendations – (1) Approve changes and direct Staff to bring back to Council via Consent Calendar items the MOUs between City and the following bargaining units: – (a) Ventura Police Management Association (VPMA) – (b) Ventura Police Officers Association (VPOA) – (c) Service Employees International Union (SEIU) – (2) Approve changes and direct Staff to bring back to Council via Consent Calendar items the Benefits Resolution covering Executive, Management, Confidential and Administrative Confidential employee groups – (3) Authorize Finance and Technology to adjust the budgeted expenditures and revenues appropriations in accordance with this report.
Mayor Fulton brought the meeting to order with a call of the roll – all present. The mayor then asked the council and audience to recite the Pledge of Allegiance.
Closed Session Report – anticipated litigation – no reportable action.
Agenda Item No.1 – Councilman Andrews requested that the meeting be closed in honor of Fred Goss.
Human Resources Director Jenny Roney – Cheryl Walpole joined Jenny along with Police Chief Ken Corney. The review outlines agreements obtained which are subject to the council's approval. These would affect the Police Management Association and all labor organizations.
Summary and Review – Compensation Policy Task Force – (1) Formed by City Council in August 2009 – 16 members, nine meetings, a 158 page report presented to the council on 3/2/2010. (2) Goals set by the council included – Re-examine methods and formulas for defining competitive compensation to ensure traction and retention of outstanding performers – Ensure cost effective long term approach to pensions that protect existing obligations (3) Seek feasible method for adjusting compensation during recessionary periods.
Revision to Council Compensation Guidelines – 4/12/2010 – “It is the city council's policy direction to move towards a more sustainable pension program by negotiating cost reduction provisions such as a two-tiered retirement benefits system and returning to employees paying their share of CalPERS pension contributions.”
Labor Negotiations – 5/20/2010 – Labor negotiations begin with SEIU units, police officers (VPOA) and police management (VPMA). City Council’s Goals – (1) Cost reductions through employee contributions towards retirement benefits – (2) Implementation of a second tier benefit for new employees.
Impasse Reached – Fall 2010 – City and SEIU and VPOA reached an impasse in negotiations – Prior to imposing the best and final offer, discussions with the city manager resulted in – Agreement reached on employee pension contributions and lower tier benefits for new hires in exchange for city mitigation of rising health insurance costs and additional leave time.
Summary – the Ventura Police Officers Association (VPOA) – (1) A 36 month contract term with the POA option to extend for six months – (2) 4.5% employee payment schedule towards CalPERS: [2% January 2011, 3.5% July 2011, 4.5% reached by July 2012] – (3) A second (lower) tier retirement plan of 3.0% at age 55 and single highest year for all new hires – (4) $75 per month increase to employer paid optional benefit on January 11 with an additional $42 increase (total $117) for the 2010 benefit plan year – (5) increase compensatory time off (C. T. O.) of accrual from 40 to 60 hours – (6) 35 hours of additional personal leave hours; no carryover/no payout.
Ventura Police Management Association (PMA) – (1) 24 month contract term with PMA option to extend six months – (2) 4.5% employee payment schedule towards CalPERS: [2% January 2011, 3.5% July 2011, 4.5% reached by July 2012] – (3) ) A second (lower) tier retirement plan of 3.0% at age 55 and single highest year for all new hires – (4) $54 per month increase to employer paid optional benefit – (5) increase compensatory time off (C. T. O.) accrual from 40 to 60 hours – (6) Increase separation sick leave payout to the same level as police officers (VPO).
Service Employees International Union units “A,” “G,” “S,” and “Q” – (1) A 36 months contract term with the option to extend six months – (2) 4.5 percent employee payments toward CalPERS retirement: [2.0% January 2011, 3.5% Jul. 2011, 4.5% reached July 2012] – (3) A second tier retirement plan of 2.0% at age 60 and average 3 highest years for all new hires – (4) Increase in employer contribution to optional benefit; “A” and “G” units [$52 per month January 2011; additional $27 per month 2012 benefit plan year] “S” and “O” units [$40 per month January 2011; additional $20 per month 2012 benefit plan year] – (5) Increase compensatory time off (CTO) accrual from 40 to 60 hours – (6) 27 hours of additional personal leave time; no carryover/no payout.
Unrepresented Employees: Executive, Management, Confidential, Admin Confidential – (1) 4.5% employee payment towards CalPERS; same schedule as all other groups – (2) No additional offsetting benefits for Executive group – (3) No additional personal leave time for Executive or Management groups – (4) For all but Executives, complementary changes to optional benefits, deferred compensation and leave time.
Comparisons to Labor Market – (1) Several agencies giving-cost-of-living raises with no employee CalPERS contribution – (2) Temporary employees contribution to CalPERS mark other labor agreements in our market – (3) State of California implemented second-tier group for CHP, Fire and SEIU with 2.0% to 5.0% employee pension payment increases.
Setting a New Standard – (1) First in our labor market to implement second tier CalPERS formula for Miscellaneous or Safety groups – (2) Ventura employee concessions show highest percentage savings of any agency agreement in Ventura or Santa Barbara Counties over last three years.
Projected Savings by Fiscal Year
Recommendations – (1) Approve changes and direct Staff to bring back to Council via Consent Calendar items the MOUs between City and the following bargaining units: – (a) Ventura Police Management Association (VPMA) – (b) Ventura Police Officers Association (VPOA) – (c) Service Employees International Union (SEIU) – (2) Approve changes and direct Staff to bring back to Council via Consent Calendar items the Benefits Resolution covering Executive, Management, Confidential and Administrative Confidential employee groups – (3) Authorize Finance and Technology to adjust the budgeted expenditures and revenues appropriations in accordance with this report.
Public Communications – David Grau of the Ventura County Taxpayers Association outlined a rebuttal – the increase in pension costs will be $2.8 million, and his suggestion was that the city should be able to mitigate about $1 million of that cost.
The speaker then offered a slide titled, “City MOU Benefits Phased-in,” that merely restated portions of Staff’s presentation. His claim was that this is not a new tier but one that now matches the Firefighters Association plan as it now exists.
A second slide with the title, “Unions Benefits Immediately,” found it necessary to rearrange the deck chairs and show that police are paid $900 and SEIU up to $624 for optional health benefits at signing with 56% and 51% increases, respectively, in year two.
The police would be awarded 35 additional hours and SDIU 27 additional hours of personal leave at signing – and must be used each year. This according to the speaker was the biggest issue for the taxpayers association. “Must be used each year,” meant, to the speaker, that this represents an “incentive,” if you will, for city employees to actually make use of the benefit they’ve been awarded through the process of fair and equitable negotiations.
As for the $1 million annual savings – assuming that 14,450 hours of additional time off for paid vacations will cost the city nothing – the speaker said that this was true, but that the city will lose 14,450 hours service. The jobs may then be backfilled which dictates overtime. However the activity has not been verified as to overtime. And since no overtime will be used to cover police and SDIU members while on vacation, this then translates into fewer employees “on the job” and working, according to the speaker’s logic.
[Comment] Police and fire units have been known to work (or remain on call) around the clock, 24 hours a day. Is this not enough for some people? [Ed.]
The question for City Council – either the contract delivers $1 million in promised savings, and in the process a negotiated cut in police and other services, or:
The Council knows it will not cut services and will allow overtime costs to increase, eroding $1 million savings and making the contract meaningless. In the speaker’s opinion, the city has not gone far enough in developing a true second tier system. By approving the contract, he said, “We are saying that we will take $14,000 hours of city workers’ time and put them on vacation, paid for by the city.” The speaker requested that this contract be rejected and especially in relation to the second tier issue.
Dick Thompson, President of the Ventura County Taxpayers Association, spoke next, noting that in Montclair the city requires the firefighters’ association to contribute two-thirds toward its pension fund and reduces healthcare benefits for the next nine months. In Stanislaus County they are returning their pension plans to 1999 levels. The speaker then rolled off a list of cities that have reduced their pension programs. He said that the choice for Ventura's is clear – that the savings is less than half of the savings that are promised.
Kevin Mackatee said that there is a movement sweeping the country. Many civil servants are “instant millionaires” through their pension plan programs. A member of the VCTA Board of Directors, the speaker noted that the soon-to-be Assistant VC Sheriff, John Kronbach, “a leading beneficiary of the bloated pension system,” was quoted in a local publication as having said, “We certainly didn’t create the problem,” with the speaker going on to observe that it is the individual who is the last bastion of defense in saving us from the rules of labor. The speaker urged the council to reject the recommendations being placed before them.
[Comment] There is just nothing that will satisfy certain groups beyond plain old slave labor. Is it any wonder that China looks so attractive to these people? … minus its indominatible socialistic, communistic, atheistic and generally despised form of capitalism?. [Ed.]
The next speaker, Bill Knox, claimed that we will have substantial overtime costs with this plan, noting that a CalPERS discount rate of over 7% going forward makes the presentation woefully inaccurate. Bringing people in from lateral transfers will not solve the problem, according to the speaker.
Bob McCord – the speaker claimed to have been impressed with the comments from the taxpayers association, claiming also to have read all the CalPERS reports. His claim was to feeling a bit ambiguous over the final recommendation. He expressed disappointment over the fact that the release time for the documentation was short based on a holiday weekend, and that there seemed to be a “rush to judgment.” A $500 billion unfunded liability exists for the state, along with a $48 million unfunded liability for the city of Ventura. The actuaries appear “disquieting,” according to the speaker. His point was, “don't rush to this.”
Jim McDermott – the speaker said that council members themselves are beneficiaries of the SEIU contract. He said that it is remarkable that based on the conflicts of interest that we are even talking about this issue. The speaker noted that Ventura is much worse off than the other cities which were referred to earlier by the taxpayers association. Oxnard and Simi Valley show that their plans are in much better condition as well. The speaker noted that “we are constantly beating up Wall Street” for our problems, in his mind at least. But for Wall Street, safety would never have the problems now needing to be bailed out by the taxpayer at the same level of benefits, he noted. The speaker also wished to recommend delay rather than a rush forward.
Rosie Arneilles spoke as a resident and an employee representing SEIU – saying that she is one of the lowest paid employees that the city has, yet one of the most visible. She noted that union workers have been going through the same difficulties the general population has felt due to the economy. She refuted the idea that people in the public sector are the “fat cats, who are not affected by lowered economic times. She noted that they are not getting cost of living increases. The speaker addressed the concerns of the taxpayers association by noting that pension spikes do not apply to public employees. City Shutdown periods occur in public service which does not apply burden to city resources but is born instead by the individual. She noted that the city budget problems are not caused by “instant millionaires” masquerading as city employees.
The mayor asked the city attorney to speak to a specific section of the contract, but the city attorney advised the mayor that this question might be premature. The mayor also asked for clarification of the suggestion by speakers that the city’s CalPERS funding liability will reach $2 million in the coming session. City manager Cole stated that the projections of unfunded liability and accrued liability are figures that change year over year. Our accrued liability will rise by $2.8 million next year, but the money paid to PERS will go up 1.5 million. The savings tonight will be $1 million because they don’t include fire or fire management. In the following year pension rates will go up, but not as much as our savings will go up, meaning that we will “slip back” a little bit, but with a significant dent in the costs in the third year.
Mr. Grau had said that in the second year costs would go up by more than 50%, as mentioned again by the mayor, with the city manager responding that current optional benefits for the police officers are $435 per month with a 25% increase and not a 56% increase, according to Mr. Cole. By not increasing the medical makes it a 20.5% increase and again not 56%. If applied only to the optional benefits, it becomes a total of 13.8%, and taking option and medical together makes it a 9.5% increase. Using the maximum number (A & G) would allow a 20.3% increase or a 12.7% increase of the total package, according to the city manager. Only one union, A and G, has seen any increase in medical benefits over the past 6-1/2 years since he (Mr. Cole) has been city manager. The city of Ventura has contributed exactly $0 in medical benefits – except for A. and G. The city was not happy about making this one small adjustment because the city cannot afford the costs of higher medical premiums. Medical costs begin immediately, according to the speaker, but rather than front loading, we were acknowledging that the employee will not see immediate benefits in relation to the costs.
Chief Corney was asked by the mayor whether there was either overtime or a de facto cut in service, as was suggested by one of the speakers. The chief replied that there would be no change to the department’s time-off policy, which currently allows for only one person to be off for vacation at any one time on a single shift. “It wouldn’t be anything close to two less police officers per day,” the chief declared in response to one of the speaker’s comments.
The mayor noted that the taxpayers association may have points, but that even the council and the mayor are citizens who pay taxes. The mayor said that Ventura has accomplished things that others have not in the area by successfully implementing the two-tier system. Other jurisdictions that may have been more aggressive after pensions have also started from a higher base than we have. In the Bay Area pensions were set at 3% at 60 years of age and went down from there.
The standard in this region that has been settling with police has been to “back load” the contracts. The other cities in the area are gambling that in two or three years the revenue will come back and they will be able to make up the differences. The mayor's greatest fear is that by the time revenue goes up funds would be eaten up by pension costs. He claimed that we have given ourselves the flexibility to make up that unfunded liability. The mayor said, quoting a phrase from the city manager, that “we should not let the perfect get in the way of the good.”
Council Member Weir said that “time flies.” Two years ago it was said that the situation would be solved by now. The city's employees understand that costs cannot be sustained without cutting services. Her claim was that this is a step in the right direction, and will not totally solve the problem. She noted that as part of the two-tier system, SCIU has agreed to the three highest years, noting that the police benefits are still based on a single highest year which does not help the city over the long term. Getting staff extra days off works against the best interest of the citizens, according to her, and noted that she will not be able to support these agreements this evening. “Fiscally the city needs more than this,” the councilwoman said.
Council Member Morehouse asked Staff as to why this must be done now, and what would happen if there are delays. City Manager Cole said that the council always has the prerogative to delay. Mr. Cole noted that this is not the council’s final action, but that in two or three weeks there will be an additional session. He noted that we had been at negotiations for seven months, and there is a budget to get out for next year. Addressing the councilman he said “you know what the alternative is.” If impasse is reached again, it dictates a return to the subject. The question is “when does this end?” We must “keep our eye on the ball” and that Council must arrive at a preliminary decision this evening.
Mr. Morehouse replied, thinking that spending contracts such as with the fairgrounds, always affect issues such as police overtime which we know from the past. This is a runaway cost, according to the councilman.
Ken Corney replied that there is over $400,000 for police services that is paid for by private vendors such as the fairgrounds. He said that he doesn't see it happening that this becomes an additional drain on overtime and city resources.
Further Council discussion or a motion was requested by the mayor – Deputy Mayor Tracy congratulated the staff for its presentation. The deputy mayor also thanked the taxpayers association, noting that there are legitimate concerns and that all parts of the agreement, or any agreement, may not be to everyone's liking. Agreement with Chief Corney was stated as regarding the overtime figures, and that the negotiating process means meeting people halfway. His view was that it was a step in the right direction. The motion was made to approve the recommendations along with a second.
Council Member Andrews wished to speak to the motion saying that the staff did an excellent job in presenting the negotiations in a positive light, but the presentation, as it came to him, was an exercise in putting “lipstick on a pig.” He stated that he cannot support the recommendations because “they don't go far enough.”
It is useful to note that these agreements give back only about 4% over a three-year period, while the newly elected governor has stated his desire to obtain a 10% level, said Mr. Andrews. The only way left is to secure reductions from existing employees, and he believes that we need to do that. The employee contributions to PERS is will be “eaten” by services to the city, meaning that in the end there is no budgetary benefit.
Council Member Morehouse spoke again thanking the taxpayers association, noting that he worked for the county at one time and sitting on the city council you face different realities. He is active in the League of California Cities, and has seen the need for trade-offs. There will be a reduction in services in all of our lives, as stated by the new governor. We don't have the income stream and even if you do adjustments in salaries these adjustments will occur. In reductions such as these we end up with demoralized troops. Many of our unrepresented are not all that well paid. The councilman claimed to be in retirement with less than $32,000 per year. He also noted that our public employees, “to [his] rude awakening,” do not qualify for Social Security, and that all they will have is what they obtain from their pensions. He noted that “he had to soften a bit” and that the SEIU represents a majority of our people.
The councilman claimed that he would be supporting the motion, noting that it's not a perfect world but that we are unique to the county and have gotten concessions on two-tier.
The mayor asked for a called the roll. Brennan; yes – Weir; no – Morehouse; yes – Andrews; no – Monahan; yes – Tracy; yes – Fulton; yes.
In memory of Fred Goss him the mayor adjourned the meeting, indicating that the next regular meeting would be held on Monday, January 24.